Dividends, leverage and endogeneity: a simultaneous equations study on Malaysia
Drawing upon preceding empirical studies on the potential endogeneity of both debt and dividends in developed markets, this study investigates two-way causal relationships that can exist between payout decisions and debt policies in Malaysian listed companies. The analysis is performed by applying a...
| Main Authors: | , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
University of Wollongong, Australia
2018
|
| Online Access: | http://psasir.upm.edu.my/id/eprint/60596/1/Dividends%2C%20leverage%20and%20endogeneity%20a%20simultaneous%20equations%20study%20on%20Malaysia.pdf |
| _version_ | 1825932220589670400 |
|---|---|
| author | Ghasemi, Maziar Ab Razak, Nazrul Hisyam Muhammad, Junaina |
| author_facet | Ghasemi, Maziar Ab Razak, Nazrul Hisyam Muhammad, Junaina |
| author_sort | Ghasemi, Maziar |
| collection | UPM |
| description | Drawing upon preceding empirical studies on the potential endogeneity of both debt and dividends in developed markets, this study investigates two-way causal relationships that can exist between payout decisions and debt policies in Malaysian listed companies. The analysis is performed by applying a simultaneous equations model (SEM) on a sample of 267 listed firms on the Main board of Bursa Malaysia during 2006–2014. The main findings indicate that when dividend is treated as endogenous, there is a positive impact on leverage. However, leverage is found to have a simultaneous negative impact on dividends. The findings also show that liquidity and performance positively affect dividends, although they have a negative effect on leverage. Additionally, this study documents an inverse relation between tangibility and debt, a direct relation between reputation and debt, and also confirms that larger firms tend to pay out a higher percentage of dividends per share. |
| first_indexed | 2024-03-06T09:38:38Z |
| format | Article |
| id | upm.eprints-60596 |
| institution | Universiti Putra Malaysia |
| language | English |
| last_indexed | 2024-03-06T09:38:38Z |
| publishDate | 2018 |
| publisher | University of Wollongong, Australia |
| record_format | dspace |
| spelling | upm.eprints-605962018-06-07T08:45:51Z http://psasir.upm.edu.my/id/eprint/60596/ Dividends, leverage and endogeneity: a simultaneous equations study on Malaysia Ghasemi, Maziar Ab Razak, Nazrul Hisyam Muhammad, Junaina Drawing upon preceding empirical studies on the potential endogeneity of both debt and dividends in developed markets, this study investigates two-way causal relationships that can exist between payout decisions and debt policies in Malaysian listed companies. The analysis is performed by applying a simultaneous equations model (SEM) on a sample of 267 listed firms on the Main board of Bursa Malaysia during 2006–2014. The main findings indicate that when dividend is treated as endogenous, there is a positive impact on leverage. However, leverage is found to have a simultaneous negative impact on dividends. The findings also show that liquidity and performance positively affect dividends, although they have a negative effect on leverage. Additionally, this study documents an inverse relation between tangibility and debt, a direct relation between reputation and debt, and also confirms that larger firms tend to pay out a higher percentage of dividends per share. University of Wollongong, Australia 2018 Article PeerReviewed text en http://psasir.upm.edu.my/id/eprint/60596/1/Dividends%2C%20leverage%20and%20endogeneity%20a%20simultaneous%20equations%20study%20on%20Malaysia.pdf Ghasemi, Maziar and Ab Razak, Nazrul Hisyam and Muhammad, Junaina (2018) Dividends, leverage and endogeneity: a simultaneous equations study on Malaysia. Australasian Accounting, Business and Finance Journal, 12 (1). pp. 47-64. ISSN 1834-2000; ESSN: 1834-2019 http://ro.uow.edu.au/aabfj/vol12/iss1/4/ 10.14453/aabfj.v12i1.4 |
| spellingShingle | Ghasemi, Maziar Ab Razak, Nazrul Hisyam Muhammad, Junaina Dividends, leverage and endogeneity: a simultaneous equations study on Malaysia |
| title | Dividends, leverage and endogeneity: a simultaneous equations study on Malaysia |
| title_full | Dividends, leverage and endogeneity: a simultaneous equations study on Malaysia |
| title_fullStr | Dividends, leverage and endogeneity: a simultaneous equations study on Malaysia |
| title_full_unstemmed | Dividends, leverage and endogeneity: a simultaneous equations study on Malaysia |
| title_short | Dividends, leverage and endogeneity: a simultaneous equations study on Malaysia |
| title_sort | dividends leverage and endogeneity a simultaneous equations study on malaysia |
| url | http://psasir.upm.edu.my/id/eprint/60596/1/Dividends%2C%20leverage%20and%20endogeneity%20a%20simultaneous%20equations%20study%20on%20Malaysia.pdf |
| work_keys_str_mv | AT ghasemimaziar dividendsleverageandendogeneityasimultaneousequationsstudyonmalaysia AT abrazaknazrulhisyam dividendsleverageandendogeneityasimultaneousequationsstudyonmalaysia AT muhammadjunaina dividendsleverageandendogeneityasimultaneousequationsstudyonmalaysia |